Category Archives: Central Planners

“Back in February, we commented on the unprecedented hyperinflation about to be unleashed in the Venezuela whose president had just announced that he would expand the “weekend” for public workers to 5 days.

“About the same time, the WSJ announced that, ‘millions of pounds of provisions, stuffed into three-dozen747 cargo planes, arrived in Venezuela from countries around the world to service Venezuela’s crippled economy. But, instead of food and medicine, the planes carried another resource that often runs scarce there: bills of Venezuela’s currency, the bolivar.’”

“The 747 cargo shipments were part of the import of at least five billion bank notes as the government boosts the supply of the country’s increasingly worthless currency.”

“More planes were coming: in December, the Venezuelan central bank began secret negotiations to order 10 billion more bills which would effectively double the amount of cash in circulation[and thereby also reduce the real value (purchasing power) of Venezuela’s national debt by 50%]. That order alone is well above the eight billion notes the U.S. Federal Reserve and the European Central Bank each print annually—dollars and euros that, unlike bolivars, areused world-wide.“

Yes, it’s true that the U.S. dollar and the EU’s euro are different from the Venezuelan bolivar in that dollars and euros are “world reserve currencies” that are recognized and “used world-wide”. The bolivar, on the other hand, is primarily a “local” currency used and recognized almost exclusively within Venezuela.

However, it’s also true that dollars and euros are also virtually identical to Venezuela’s bolivar in that all three currencies are fiat, debt-based and intrinsically worthless. That equivalence is nothing to sneer at.

Why? Because dollars and euros might do better than bolivars today, but that won’t always be so. Venezuela is giving the world yet another lesson on the inevitable fate of fiat currencies: hyperinflation and national ruin.

Central Planning = Communism“From each according to his bank balance; to each according to his political connections.”[courtesy Google Images]

During the Soviet Union’s final 15 or 20 years, there was a “joke” that was both cynical and popular among Communist workers: “They pretend to pay us; we pretend to work.”

I believe the attitude expressed in that “joke” was a fundamental cause for the “evil empire’s” demise. The government wasn’t really paying the people for their work. The people weren’t really working for their “pay”.

Everyone was lying. The Communist government lied about paying people. The people lied about working.

The resultant breakdown in the relationship between the government-employer and the worker-employees destroyed what was once the second most powerful nation the earth had ever seen.

There’s a lesson in the USSR’s demise about the need to really “pay” people for their work and stop all the lying.